Monday, April 27, 2020

How Much is My Investment Property Worth?

How Much is My Investment Property Worth? Read the full blog post here: Let's talk about whether or not this is a good investment or what price should we sell it at. The income approach will help us determine the property's value. The income approach is used for valuation of income-producing properties such as apartment buildings, office buildings, retail stores and shopping centers and is based on anticipation. These are the 5 steps that are taken into consideration - G - I - V - E - N

GROSS Income - estimate it depending upon market, also include sources such as vending machines, parking fees, and laundry machines. Vacancy - deduct for vacancy and rent loss. Expenses - items such as heat, hot water, utilities, real estate taxes, insurance, legal & accounting fees, advertising and property management are included. Mortgage payments (principal and interest) are debt service and are not considered operating expenses. Net Operating Income - deduct the annual operating expenses from the effective gross income to arrive at the annual net operating income (NOI). Estimate the capitalization rate (cap rate) or get it from your local experienced real estate agent. In Hartford County, the cap rate is 7.19% for apartment buildings and mixed use right now. This is determined by comparing the relationship of net operating income with the sales prices of similar properties that have sold in the current market. For example, ca comparable property that is producing $5,000 per month of NOI, $60,000 annualized NOI and the cap rate is 7.19% would have a value of $834,492.35. Here are the 3 equations used: Value x Rate = Income Income / Value = Rate Income / Rate = Value This will help to determine the value and or what the expected income should be. It is just a gauge that is used. For more real estate ideas, subscribe to my YouTube Channel! Where I hang out online... Rob Rosa is a licensed real estate broker in CT Berkshire Hathaway HomeServices New England Properties 1160 Silas Deane Highway, Wethersfield, CT 06109

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